US budget deal made too late to avert shutdown

Reuters, WASHINGTON

The US Senate yesterday approved a budget deal including a stopgap government funding bill, but it was too late to prevent a federal shutdown that was already underway in an embarrassing setback for the Republican-controlled Congress.

The shutdown, which technically started at midnight, was the second this year under US President Donald Trump, who played little role in attempts by party leaders earlier this week to head it off and end months of fiscal squabbling.

The US Office of Personnel Management advised millions of federal employees shortly after midnight to check with their agencies about whether they should report to work yesterday.

The Senate’s approval of the budget and stopgap funding package, by a vote of 71-28, meant it would go next to the House of Representatives, where lawmakers were divided along party lines and passage was uncertain.

House Republican leaders on Thursday had offered assurances that the package would be approved, but so did Senate leaders and the critical midnight deadline, when current government funding authority expired, was still missed.

The reason for that was a nine-hour, on-again, off-again Senate floor speech by US Senator Rand Paul, who objected to deficit spending in the bill.

The unexpected turn of events dragged the Senate proceedings into the wee hours and underscored the persistent inability of Congress and Trump to deal efficiently with Washington’s most basic fiscal obligations of keeping the government open.

The shutdown could be brief. If the House acts before daybreak to approve the package from the Senate, there would be no practical interruption in federal government business.

If it does not, the result would be an actual shutdown, the second of the year, after a three-day shutdown last month.

Paul said during his marathon speech, which strained fellow senators’ patience, that the two-year budget deal would “loot the Treasury.”

The bill would raise military and domestic spending by almost US$300 billion over the next two years. With no offsets in the form of other spending cuts or new tax revenues, that additional spending would be financed by borrowed money.

The budget part of the package was a bipartisan attempt by Senate leaders to end for many months, at least beyond November’s midterm congressional elections, the fiscal policy quarrels that increasingly consume Congress.

However, the deficit spending in the bill would add more red ink to Washington’s balance sheet and further underscore a shift in Republican thinking that Paul was trying to draw attention to.

Once known as the party of fiscal conservatism, the Republicans and Trump approved a sweeping tax overhaul bill in December last year that is to add between US$1.5 trillion and US$20 trillion to national debt over 10 years.

“I ran for office because I was very critical of [former US] President [Barack] Obama’s trillion-dollar deficits,” Paul said.

“Now we have Republicans hand in hand with Democrats offering us trillion-dollar deficits. I can’t ... in good faith, just look the other way because my party is now complicit in the deficits. Really who is to blame? Both parties,” he said.

Paul voted for the deficit-financed tax bill in December last year.

The shutdown in Washington came at a sensitive time for financial markets. Stocks plunged on Thursday in New York on heavy volume, throwing off course a nearly nine-year bull run.